The Problem with Personal Financial Management Tools
Richard Eisenberg
Richard Eisenberg

You'd think that the Internet and mobile apps would be fantastic ways to help people manage their money. So why do so few of us in our 50s and 60s take advantage of personal financial management online and mobile tools from banks, credit unions and tech companies?

Only 16 percent of boomers use these types of tools (compared with 44 percent of Gen Yers), according to a new survey of 1,115 consumers by Aite Group, a financial services research and advisory firm. Half of the users of, the big gorilla in the personal financial management world, are 25 to 34 and rent their homes, suggesting to me that boomers aren't big Minters.

Why These Tools Should Be Helpful

And yet our generation generally has far more in assets and more complicated financial lives than people in their late 20s and early 30s. "Between checking accounts, savings accounts, 529s for the kids' or grandkids' college costs, 401(k)s, stocks and bonds, that's a lot of information to keep track of," says John Breyault, vice president of public policy at National Consumers League, which recently played host to an online chat about these tools with Chase Blueprint.

So wouldn't it make sense that we'd be manic users of websites like Mint and Yodlee, software programs like Quicken and the latest money apps to manage our finances? As Sally Greenberg, executive director of the National Consumers League, says: "Personal financial management tools give consumers a powerful way to keep track of multiple credit cards and their bank and retirement accounts."

But most boomers don't. Is it us or is it them (the financial institutions and other tool creators)?

Turns out, it's a little of both.

Little Interest in Money Management

As much as it pains me to say this, many of us aren't interested in managing our money. Only about 10 percent of boomers are "highly engaged in their financial lives," says Ron Shevlin, author of the Aite Group report. Truth is, money management can be a time-consuming chore and sometimes confusing.

It stands to reason, then, that if you're a midlifer with a passel of 401(k) accounts, IRAs, mutual funds, bank accounts, credit cards and loans, you can be easily turned off by the thought of laboriously inputting all that data into a program that may or may not be helpful. (If you've ever tried to type your portfolio into an iPad, you know what I'm talking about. )

And yet, people who make the effort to use personal financial management tools often change their habits as a result, shoring up their finances.

Phil Christian, general manager of Chase Freedom, said at the online chat that his company's Chase Blueprint users are more likely to pay down their credit-card balances faster, pay bills on time and save on interest charges than bank customers in general.

The Disappointment of the Money Management Tools

After attending that online chat, I came away thinking that the money tools have largely been a huge disappointment.

They're fine for letting you know what you've got, which is why they're especially popular with young people trying to budget for the first time. But they're not so great if you're trying to figure out what to do about your money.

"Just having all the information in one place and presented in an appealing way doesn't necessarily help someone make better decisions," Breyault says.

I'm not a huge Suze Orman fan, but I believe personal financial management sites and apps could take a page out of her book.

They ought to tell users things like: Can I really afford that? Better still, they should be offering more personalized guidance and advice on investing and financial planning. (A few are starting; I just blogged about one instructive site that shows you how to manage your debt better, Credit Sesame.)

"PFM makers say, 'We'll help you and empower you,' but their tools don't really do that," Shevlin said at the online chat. His report claimed that more than 10 years after financial institutions began implementing these types of websites, "the promise of PFM has yet to be realized."

Shevlin thinks these tools will only catch on if they offer "strong advice capabilities." Two he says that do this well:, which analyzes your credit card, wireless and TV bills and recommends alternatives (it's parent company is Truaxis) and Billguard, which spots fraud charges on your credit- and debit-card bills.

Fears About Privacy

Privacy concerns are another reason many of us don't use these money-management tools. Laying bare the details of all your holdings in one place is a scary thought, since it would only take one shrewd hacker to get his grubby hands on the data and wreak havoc.

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"If you don't guard your password carefully, someone else can get all of your financial information," Linda Sherry, director of national priorities for the advocacy group Consumer Action, said in the online chat. "I've read that one bank is thinking of letting you use Facebook to log into its PFM. That sets off a lot of alarms to me."

And how will you get hold of all the info you've stored, Breyault asks, if the hot new PFM startup you're using isn't around next year?

A Boon for Lower-Income Americans

Done right, personal financial management tools could be especially useful for low-income Americans, particularly the elderly. These are exactly the types of people who can't afford to make big money mistakes.

I was heartened to see that in the U.S. Treasury Department's MyMoneyAppUp Design Challenge -- a competition to find the best new mobile app ideas and designs to help Americans make smart financial choices -- one of the winners was MOOLAH, specifically aimed to assist lower-income households.

The brainchild of Pamela Chan and Eric Tyler - policy analysts for the New America Foundation, a nonpartisan think tank - MOOLAH would let users create budgets and recommend related social services and financial products. I'm hoping the $5,000 prize will help Chan and Tyler get MOOLAH on the market.

How to Get Started

If you haven't yet used a personal financial management site or app but are thinking of trying one, Breyault recommends taking baby steps.

"Start small and see if the PFM actually helps you," he says. "Maybe try tracking one or two of your financial accounts for a month. If it helps you save time, then consider adding some more. I would advise someone with multiple accounts - which folks in their 50s and 60s often have - from loading up their entire financial portfolio into a PFM without test-driving it first."

Otherwise, you could find yourself with a bottle of migraine medicine, wondering whether PFM actually stands for Poor Friggin' Me.

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